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Performance-Based Logistics: Examining the Successes and Challenges when Operating in Stressful Environments

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Given current and anticipated budgetary constraints, the Department of Defense (DoD) must heighten its focus on affordability, especially with regard to operations and maintenance costs, which account for almost two thirds of the defense budget. At the same time, new and evolving threats demand superior technology that is highly reliable. To a large extent, these twin objectives—reduced costs and better performance—can be achieved through the wider implementation of performance-based logistics (PBL) contracting, a proven strategy to obtain economical and innovative  support solutions. Unfortunately, however, PBL contracting is not being aggressively pursued across the DoD.

Rather, the number of PBL-supported systems has declined. In 2005, there were more than 200 PBL contracts in place within the DoD. By 2013, the number of PBL contracts had dropped to 87, while total DoD sustainment costs continued to increase (Irwin, 2013). We believe that while PBL may appeal to users and program officials from a theoretical standpoint, some may be reluctant to embrace this strategy for fear that PBL arrangements may falter when supported systems are deployed in contingency and combat operations.

This perception manifests itself in a number of ways. For instance, some question whether the PBL mechanism is flexible enough to adapt to rapidly-changing conditions, that perhaps PBL works—until it doesn’t. There is also concern over whether contractors will be able to perform at the same high level during contingency and combat operations, especially if these providers are deployed in theater. To address the validity of these claims, we examine four combat systems: the H-60 Seahawk helicopter, the High Mobility Artillery Rocket System (HIMARS), the Apache AH-64 helicopter, and the Stryker Armored Combat Vehicle.

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